The NCUA filed suit late last month against David Addison, former CEO of Texans Credit Union, accusing him of breach of fiduciary duty and gross negligence that led to the $1.4 billion credit union’s April 2011 conservatorship.

The complaint, filed in U.S. District court in Dallas, alleges that the credit union’s failure resulted from Addison’s ill-advised decision to acquire financial services firm OBS Holdings Inc. and other investments. Almost immediately upon being named CEO in 2003, Addison “began making drastic changes to the credit union, changing longstanding internal policies and fundamentally shifting its overall business focus,” the suit said. The credit union’s strategy shifted from traditional credit union services to investments in “several risky businesses and commercial loan participations” not typically associated with credit unions, the NCUA said.

Addison ignored warnings that TCU’s purchase of OBS was not only impermissible under Texas law but also exposed the credit union to an extraordinary level of risk. Addison hid that risk from TCU’s board to gain approval for the purchase, the lawsuit claims.

“Mr. Addison’s actions were very costly to the credit union, and financial institution regulators have a responsibility to hold accountable those parties–institutions or individuals–when they undermine safety and soundness,” NCUA Board Chairman Debbie Matz said.

“NCUA is required by statute to take every action we can to recover TCU’s losses, including legal action,” Matz said. “Any recoveries in this case will go directly to TCU, assisting in NCUA’s rehabilitation efforts at TCU.”

Addison resigned from Texans CU in January 2009. The NCUA’s suit also alleged that while TCU posted significant net losses during Addison’s tenure, his salary and benefits “increased substantially.”

According to nonprofit reporting website Guidestar.org, Addison earned $523,236 from TCU in 2008, and was paid $534,605 in 2009 despite only working there one month.

The NCUA said the 130,000-member TCU has improved operating efficiencies and risk management since its conservatorship and earned more than $21 million this year as of Nov. 30, 2012.

Addison was recently involved in the purchase of a majority ownership of Kansas City-based credit union investment CUSO CNBS LLC, as a founder and partner of Dallas-based Aberdeen Capital Holdings, according to a Nov. 2 letter posted on the CNBS website. CNBS touted Addison’s 20-year credit union career in the letter, noting he is among several partners in Aberdeen.

However, CNBS President Brian Hague said the lawsuit will have no impact on CNBS.

“He is not Aberdeen,” Hague said of Addison.

The CNBS president said he has spoken with Aberdeen about Addison’s investment position in the firm and was told the former TCU president is a minority investor.

Hague stressed that the NCUA’s suit is still an allegation. If the federal regulator is successful in collecting damages from Addison, Hague said the NCUA could conceivably seize his investment assets in Aberdeen if he still owns a stake, but Addison is still “once removed” from any investment in CNBS.

The remaining 49% ownership of CNBS is split among 14 corporate and natural person credit unions. Hague said he has not received any calls from owners concerned about the NCUA’s suit.

Rick Lappi, president/CEO of the $82 million Duluth Teachers Credit Union, said he’s not concerned about Addison’s past ties to CNBS, even though his Minnesota credit union owns a small percentage of the CUSO. Lappi said the NCUA suit and any potential fallout is irrelevant because his 8,000-member credit union’s stake in CNBS is immaterial on his balance sheet.

Additionally, DTCU doesn’t currently use the CUSO for investments, given the low rate of return offered on securities.

“There’s just not a lot of risk for us there,” Lappi said.

According to Addison’s LinkedIn profile, the former Texans CEO left Aberdeen in November 2012. It is unknown if Addison still owns a financial stake in Aberdeen.

Attempts to reach Aberdeen were unsuccessful. The company’s listed phone number is connected to a fax machine.

Attempts to reach Addison were also unsuccessful. His home phone number in Frisco, Texas, has been disconnected, and online directories report he has moved to Madisonville, La. The NCUA’s suit lists Addison’s last known address as being in Texas, but Hague confirmed Addison moved to the New Orleans area approximately one year ago and had been commuting between the Big Easy and Dallas.

Aberdeen financial records list former TCU executive Todd Frerichs as an officer, along with Wyatt Henderson and Allen Jones. Frerichs’ LinkedIn account said he joined Aberdeen as chief financial officer in November after two and a half years as a consultant at the Federal Reserve Bank of New York. Frerichs was also chief financial officer of OBS Financial Services Inc. Frerichs had been an officer at Texans CU and its subsidiaries, including OBS, from 2005 until May 2010, approximately one year before the credit union was seized by the NCUA.